Trends and strategies of the European

retail
Markets are continuously changing and as exporter to the EU it is important to understand what
is happening and how European market players see the future. In particular, the European retail
is an important sector that defines the trends for several products. This document provides
insight information on 8 majortrends identified for the European retail sector for the coming 10
years and theforecasts and strategies expected for the following market segments: apparel, DIY
products, food (ingredients), furniture and natural ingredients for cosmetics.

Introduction
A trend is about a general direction in which something tends to move. This movement
results of influences, such as growing population, scarcity of resources, political landscape,
developed technologies, and economic changes. A
trend tells what is happening on a global scale but can
also be looked from a regionally (e.g. Europe) or local
point of view. A trend has the power to influence the
behaviour, demands and needs of consumers. For
example, economic instability can lead to more pricequality conscious consumers. The actual impact of a
trend depends on the size, location and characteristics
of the market.The impact can also differ from market
segment to market segment. For example, a health
trend may have more impact in the food and cosmetic
segment than in furniture.
If a trend is noticed or expected to influence the demands and needs of consumers, retailers
have to adapt their strategies to at least maintain their market shares and preferable make
profit. For companies in developing countries (DC) supplying the European market, it is
important to take notice of those trends, because they will probably been translated into
requirements that EU buyers will ask from their suppliers. On the other hand, these trends
can offer new market opportunities in the EU market.
This document provides information on trends influencing or expected to influence
European retail strategies in the following market segments:
1.
2.
3.
4.
5.

Apparel
DIY ( Do- It Yourself)
Domestic furniture
Food (ingredients)
Cosmetics

Section A provides information on the 8 major trends that are estimated to impact the
aforementioned retail segments in the next 10 years. Section B provides information on
strategies that the retail segments may choose to implement with a view to face these
trends.

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Trends in and strategies of the European retail industry

A. Trends
Based on large, completed surveys on trends from 2010-2020, 8 major trends have been
identified to be of relevance for suppliers wishing to export products to the European
1
market). These are:
1.
2.
3.
4.
5.
6.
7.
8.

Adoption of supply chain technologies

Changing competitive landscape
Demographic shifts
Growing consumer concerns about sustainability
Increased importance of health and wellbeing
Increase in consumer service demands
Increase in regulatory pressure
Scarcity of natural resources

It is important to understand that these trends represent the most important ones. One
major trend can consist of several sub trends that are interrelated. Trends also influence
each other and the combined effect of trends can result in new trends being identified.
1.

Adoption of supply chain technologies

Supply chain and logistics systems enable retailers to produce, purchase and sell products
worldwide. In terms of effectiveness and efficiency retailer strategies can focus on:
Supply chain and cost cutting;
Information sharing and data transparency;
Collaboration, partnerships and inter-organisational communication;
Globalisation and cross-border supply chains with multi-tier structures;
Technologies for tracking, protecting and managing cargo flows (e.g. RFID, bar codes).
Example: Aholds new supply chain for online business
Ahold, a major multinational supermarket chain of the Netherlands, is about to test a new
supply chain model for online business with the purpose to cut costs associated with
transportation and give their online sales a boost. In this new supply chain the so-called
fulfilment factories and pick up points play a crucial role. Especially the pick up points
can lead to considerable savings on operational costs associated with distribution as
customers themselves have the option to pick up their groceries purchased online.

Retrieved from website G1, December 2011

DC stands for Distribution Centre
1

Example of sources used: 2020 Future Value Chain - Building strategies for the new Decade (link),
Retail 2020 - ReStructure (only available in Dutch) (link) and The Consumer goods forum Top of Mind
2011.
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Trends in and strategies of the European retail industry

2.

Changing competitive landscape

Moderate growth with inflation and insecurities lead to cautious consumers. As a

consequence retailers need to find strategies that allow them to differentiate from their
competitors within their retail segment. Strategies can relate to:
Availability: Related to the activity-square metres ratio, locations and opening hours.
Benefits: Consumer loyalty programmes, including special discounts, promotional
offers, awareness of products and services and third-party offers.
Features: Service.
Price: High-end pricing, low-end pricing (hard discounts), medium pricing.
Quality: Branding and private labels.
Variety: Merchandise range
3.

Demographic shifts

Demographic shifts (changes is the composition of the population) determine essential

aspects of retail as they influence or change consumers needs and demands. Demographic
shifts open up new niche markets and can require retailers who do not want to loose
market share or want to expand their business to start new brands, widen or deepen their
product assortment, adapt their pricing philosophy and service policy and change the
design and layout of their shops and commercial signage.
In Europe, demographic shifts include the following sub trends:
Aging population: There is a large number of older people already. Moreover, life
expectancy keeps growing in Europe and the fertility rate is staying low. This sub trend
is expected to have a significant influence on retail as it is a long term trend. This
group has a high purchasing power and thus an interesting target for the retail. Needs
of older people include, for example, healthy products, readable product information
(labels) and comfort/leisure. This group is often loyal to brands and quality is an
important purchase decision aspect.
Increase flow of immigrants:Europe attracts large numbers of immigrants, including
people from lower developed and developing countries wanting to escape from
poverty, natural disaster, oppression or war situations. Since the accession of Eastern
European countries (e.g. Poland, Romania and Bulgaria), important movement of
population within Europe takes place. People from the new European countries
moved and are moving to the more established parts of Europe (Northern and Western
Europe). Needs of immigrants can, for example, include demands for ethnic and
exotic products, but also other kind of services.
Increased urbanisation:Urbanisation is a global trend. Urban consumers tend to be
more daring, liberal, tolerant, experienced and more prone to trying out new products
and services. As well they do not want to travel a long distance to buy their products.
Other sub trends identified are: the increase of smaller households(especially increasing
the demand for discretionary purchases, such as domestic items and household appliances)
and; the increase of young people becoming independent.All sub trends result in a less
homogeneous population in Europe and thus more opportunities in niche markets.
4.

Increased importance of health and wellbeing

Health, safety and wellbeing has increasingly been important in Europe for some time and
will likely become more important due to the increase of lifestyle diseases. Lifestyle
diseases are diseases which frequency seems to increase as countries become more
industrialised and people live longer (see trend demographic shifts as this is the case in

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Trends in and strategies of the European retail industry

Europe). Examples of lifestyle diseases are: cancer, diabetes, heart diseases, asthma,
obesity and depression.
The result is that consumers in Europe will adjust their lifestyle (e.g. diet, leisure) leading to
changing demands in personal care categories (including healthier foods, probiotics and
neutraceuticals, beauty and mood products), technology-advanced products and easy-touse consumer solutions (e.g. assisted living products for older people).In this perspective
design and innovation can become an important competitive differentiator for some
market segments (see example Philips), as well as other marketing aspects, such as product
information and product labelling (see example Tesco). Consumers who pay more
information on the health and safety aspects of product will want to be able to make
informed choices.
Example: Product development and marketing by Philips
The newly designed Philips Wake-up Light is an innovative light simulator that gently
wakes the body in the early hours of winter mornings, ensuring a sense of relaxation and
well-being.
Retrieved from website Philips, December 2011

Example: Product marketing and labelling

Spot our new health logos at the top of packs
Look out for new Healthy Eating wave design
on the front of Tesco packaging. Designed to
make it easier for you to make healthier choices,
a Healthy Eating wave immediately tells you a
product is better for you and your family as it
meets strict nutritional guidelines for fat,
saturates, salt and sugar.
Retrieved from website Tesco About Guideline Daily Amounts (GDA), December 2011

Example: UK Public and Private initiatives for healthy food

The UK government have recently launched a nationwide campaign to help supermarkets
to plan affordable healthier meals. Change4Lifes (initiative to promote healthy life) with
its new super meals campaign will offer money off healthy ingredients, such as fruit and
vegetables and low fat yoghurts, across over a thousand supermarket stores in the UK.
Further, Asda, Co-op and Aldi supermarkets have signed up an agreement to offer
discounts on products such as fish, fruit, vegetables and fish.
It is also likely to increase the awareness for the wellbeing of the planet requiring more and
new energy & environmental technologies (e.g. energy efficiencyand cleaner technologies).
Finally, political pressure can accelerate this process as national governments need to deal
with potential political risks of a burdened health care system.
5.

Increase in consumer service demands

Technology adoption requires new service models, offered via the internet and moving
beyond selling individual products. Consumers will expect and demand services 24/7.In
Europe the increase in consumer service demands includes the following sub trends:

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Trends in and strategies of the European retail industry

Individualisation/personalisation: International trend watchers see the

individualisation, focusand personalisation of products and services as a promising
retail strategy for the future. Modern EU consumers are confident, mobile and well
informed. They have individual wishes and needs and demand to be taken seriously.
This not only applies when buying special products in specialty stores (niche markets)
but also for everyday shopping in supermarkets or department stores. This demand is
already met by some product providers. They can also involve their customers actively
2
in the design and specification of their products (see box below for examples).
Example: Personalised products
Some fashion and shoe manufactures allow customers to choose the colour, shape
and decorative design of their new shoes online (e.g. Nike).
Ritter sport, a German chocolate company, opened a store in Berlin where visitors can
have their chocolate prepared by chocolatiers based on their own ideas and thus
experiment with new flavour variations (link). Also muesli buyers can have their mix
created and delivered by an online provider in the UK (link).
The IKEA family live programme allows consumers to share their own furniture
creations, give home decoration and home furnishing tips and interior design advice,
rate their projects, etc. (thus working as an online IKEA show).
Mobile phones, computer game consoles and even small cars can be adapted to suit
personal tastes and moods by means of exchangeable covers or panels.
E-commerce: The exponential growth and adoption of consumer technologies drives
new levels of services demand by consumers. Web-based services have given
consumers greater choice of shopping options and has improved transparency. In a
12-month period in 2009/2010, 40% of EU consumers purchased products and services
online. Between 2005 and 2010 this figure doubled from 20%. This growth mainly
occurred in countries where e-commerce was already widespread in 2005. Moreover,
consumers in Southern and Eastern Europe are much less likely to purchase products
and services online. Internet access via computers, mobile phones and tablets is a key
facilitator. Online purchases are more directed towards the domestic market of the
consumer. In 2010, of all making online purchases, 23% did so from a seller based in
3
another EU Member States. Even less from a non EU country.
Example: E-commerce leads to multichannel integration
Separation between different channels (cross channels) can disappear via e-commerce. For
example, Dutch supermarket concern Ahold sells groceries through their supermarket
chain Albert Heijn, personal care products through their store format Etos and wine and
other alcoholic beverages through their store format Gall & Gall. IT and internet made it
possible to opt for a single online web shop through which products of all three channels
can be purchased.
6.

Increase in regulatory pressure

Regulatory pressure presents the extent to which regulators (governments and economic
areas) threaten or actually limit a companys operations based on their overall performance
2

The so-called prosumer. A prosumer is an individual who not only acts as a consumer but also
decides how the product looks or tastes. - Retail 2020 - ReStructure (only available in Dutch) (link)
3

From Consumer behaviour in a digital environment of DG for internal policies of the European
Parliament, Policy Department A: Economic and scientific policy (2011) (link)
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Trends in and strategies of the European retail industry

or certain type of performance (e.g. environmental performance) and the extent to which
they define the characteristics of products. There are a few issues that are increasingly
and/or regularly put on the political agenda for discussion within the EU. These are:
Animal health

Occupational health and safety

Biodiversity

Subsidies

Energy consumption

Social and worker issues (e.g. employment

standards and unionisation)

Emissions

Taxes

Food and product safety

Traceability

Import quota

Use of natural resources

Import tariffs

Waste

Information disclosure/labelling
7. Growing consumer concerns about sustainability
Consumers are more aware of what products they buy and what they consume. They are
better informed (due to internet) and want to be better informed about products, processes
and stores. Furthermore, they hold retailers responsible for the social and environmental
impact of the products they sell, the production processes used, who manufactured the
product (e.g. a company which is known for violating environmental regulations) and
where the product comes from (e.g. does the product come from a country where child
labour is known to take place). Growing concerns about sustainability require retailers to
develop new strategies, such as:
Innovation: Develop, potentially together with suppliers, new and improved products
and production processes.
Choice influencing: Marketing strategies with product labels referring to some
sustainable theme, such as efficient, environmentally friendly, fair (trade),
healthy, locally grown, low impact, organic, sweatshop-free, sustainably
sourced.
Choice editing:Removal of unsustainable products and processes (in partnership
with other actors) or alter the composition of traditional products (e.g. reducing the
amount of fat, salt and calories).
8.

Scarcity of natural resources

The growth of the worlds population and a rapidly expanding middle class in low- and
middle-income countries with purchasing power have implications for price and
availability of natural resources, like energy, water, natural ingredients and material and
food.Retailers who want to stay on top of this trend need to explore and refine their
product designs, production processes, packaging materials, transportation, impact of the
use of the product and its recyclability.

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Trends in and strategies of the European retail industry

B. Strategies
Drawing up a solid strategy highly depends on the retailers objective for the coming years.
Business in general and most retailers aim to maximise long-term profits. Once determined
its objective, retailers will start to conceptualise and apply strategies that enable themselves
to achieve their long term objectives. This section advocates potential strategies identified
4
in the different market segments.

This section is mainly based on interviewed carried out with representatives of European or national
associations of the sector covered in this document.
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Trends in and strategies of the European retail industry

1.

Apparel

With a view to the CBI target group, CBI has selected the following product groups to fall
under the scope of the market segment apparel:
Body wear

Leather clothing

Knitted and woven clothing

Babies clothing

Sports clothing

Trends

Strategies

Adoption of
supply chain
technologies

Due to an expected market shrinkage of 5-10%, less retailers and

suppliers and an expected growth of the online sales, activities will be
bundled and collaboration will increase in the future supply apparel
chain. The location of stocks is also expected to move down the supply
chain. As a result more horizontal collaboration between retailers is
expected. Creating effective vertical collaboration and a realistic supply
chain strategy is key for producing countries in the coming years.
Focusing on the cross channel consumer, who combines on- en offline
channels and who will be the largest consumer group in 2015, seems a
sound approach.

Changing
competitive
landscape

Quality, price and availability of products will stay three factors that are
leading the competitive landscape from 2012. The proportion of sales of
goods under own label is expected to increase to 16-20%. The consumer
will stay King and can get every article for every price. Adding the
expected increase in horizontal and vertical collaboration indicates how
the competitive landscape will change. Suppliers can react by becoming
logistically more flexible, with shorter (production) lines and quicker
responses to the market. Sharing knowledge, developing marketing
programs and a consumer view together with retailers can result in a
win win strategy for the future.

Demographic
shifts

Aging population, increasing urbanisation and smaller households are

three main drivers for the future in Europe. Aging population will
demand different product groups and a different type of marketing.
Increasing urbanisation will create under- and overpopulated areas for
households and retail. The expected population growth is round 3 % in
the following 10 years, of which 80% will be ethnic. Also the number of
one person households is increasing which creates extra pressure on
(marketing) expenses. All of this results in a more diverse consumer
group with different ages, ethnic backgrounds, compositions and with
different needs and marketing. Focusing in or integrating these
demographic shifts in production strategies and cooperating in the
development of marketing and sales strategies in the supply chain can be
a first step for producing countries. Economic uncertainty, the market
shrinkage and an increase in online sales will also create less traffic and
will have effect on growing vacancy in shopping areas outside A1
locations. Already being aware of different customers, households and
outlets in your production strategy might create business opportunities.

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Trends in and strategies of the European retail industry

Growing
consumer
concerns about
sustainability

Influencing choice through marketing/awareness campaigns will be an

important factor in the apparel segment.Although more in food than in
non food, sustainability has landed by (female) consumers. Fashion
retailers need to get more aware of the (economic) opportunities that
sustainability offers and have to learn how to translate and use this
concept commercially. It is expected that in the future efficiency is of key
importance and around 40% of the sourced goods will be sourced
locally.

Increased
importance of
health and
wellbeing

Education, information and product development are three main items

for the apparel segment. Education and communication is essential to
make the total retail business more professional and efficient.
Furthermore new collective products and services can be developed.

Increase in
consumer
service
demands

The process of individualisation, personalisation is one important factor.

Focusing on niche markets is important in the turnover battle between
big and small retail players aiming at the same consumer. Mass
customisation appears because the interest of large consumers groups
to consume less and cheaper and because of internet. Consumer as
producer (prosumer) are interested in personalised products and are
also able to find suppliers of these kind of products(on internet). In this
way the channel from producer to consumer becomes shorter. Another
important factor is 24/7 accessibility of goods and services. Branded,
convenience, department, discount stores, e-retail (computer/ mobile),
especially E-commerce, mom-and-pop (Individual store), second-hand
and specialty stores are retail formats likely to expand in the next
decade.E-commerce is expected to be the main factor dominating the
future. The estimate proportion of sales of goods sold online within the
apparel segment is expected to grow to 20-30% in the next decade.

Increase in
regulatory
pressure

The areas of regulatory pressure of most concern (in terms of cost) in the
next decade are: energy consumption, import quota & tariffs,
information/ disclosure and labelling, traceability, use of natural
resources and waste. Potentially increasing import tariffs & quota in
producing countries will affect the export potential of a country.
Following local and EU regulations as well as (potential) regulations on
natural resources and scarce goods is important in this field.

Scarcity of
natural
resources

One expected result of scarce natural resources is increasing resource

prices. As such this is a world wide challenge that needs and will get
serious (international) attention. On the other hand it can also offer
(marketing) opportunities in the retail sector. For example due to the
price increases of cotton and environmental challenges in cotton
production, producers have partly moved to (cheaper & more
sustainable) alternatives as bamboo. Consequently, scarcity of resources
can offer opportunities, it might result in higher price and it will
probably effect the search for more flexible production channels closer
to the home market

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Trends in and strategies of the European retail industry

2.

DIY (Do It Yourself)

With a view to the CBI target group, CBI has not selected separate product groups to fall
under the scope of the market segment DIY. The trends and potential strategies for the
retail segment DIY are summarized below.

Trends

Strategies

Adoption of
supply chain
technologies

Retail bundling in central warehouses, further collaboration in the

chain, the bundling & sharing of logistics activities and keeping less
stocks are the main expected supply chain changes. Overall the trade
costs will be reduced due to the bundling of activities. So-called supply
chain turbulence, where supply chains are exposed to external volatility
and uncertainty can also be an advantage. Turning the flexibility in
sourcing and production into something positive as the rising incomes
in developing countries creates their own markets. Producing countries
could expand to more than being just manufacturing hubs.

Changing
competitive
landscape

Price, quality and variety stay central in the DIY segment. Lifestyle is
especially important for the consumer. The future competitive landscape
is challenged around more quality and more (labelled) sustainability.
Low quality products are unacceptable and sustainable labels will be
more and more clearly defined (within the EU). In general most retailers
in the DIY segment have their own label. Currently this accounts for 20%
of the market and it is expected to grow to 50% in the next decade. Focus
on sustainable products, quality and social media appear (also)
interesting tactics for producing countries.

Demographic
shifts

A growing cultural and ethnic diversity and smaller households are

important demographic sub trends in the next decade. The first will
impact the product mix (in breadth and in depth), the latter will
influence the amount and way of packaging.

Growing
consumer
concerns about
sustainability

Innovation and influencing & editing choice are important business

approaches to promote sustainable consumption in the next decade.
Translated into practice this means new and improved product based on
less waste, less material/ input and eventually less products. Growing
awareness of consumers is increasing by increasing knowledge i.e.
through pressure groups. The items raised by the pressure groups
indicate relevant future topics. Examples of current topics are climate
change, scarcity, and sustainable agriculture. Responding to one or more
of these issues can also be a potential successful strategy for producing
countries. Currently the FSC label for wood is the only relevant label for
sustainability. The market share now is less than 2% in the DIY segment
now but is expected to grow. Around 20% is now sourced locally. This is
expected to grow to 35% in Europe. For producing countries new
opportunities are forecasted in their home and surrounding markets.

Increased
importance of
health and
wellbeing

Education, information, labelling and product development are

important issues in the future. Demands for increased importance of
health and wellbeing are also pushed through the supply chain.
Producing countries should be aware of increased demands in this field.
It is expected that the labelling of product will become more clear and
transparent. A flexible approach toward certification demands from the
EU and US is also advised. Product development is (still) concentrated on
making life easy, efficiency and overall production

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Trends in and strategies of the European retail industry

Increase in
consumer
service
demands

E-commerce will be the most important driver in this field. At the

moment around 3% of sales of goods are sold online within the DIY
segment. This is expected to grow to 20% in the next decade.

Increase in
regulatory
pressure

Biodiversity, energy consumption, emissions, information & labelling,

occupational health and safety, use of natural resources and waste are
areas in which regulatory pressure is expected (in terms of cost) for the
next decade. For producing countries this might imply limits to growth
sparing biodiversity and natural resources. Also international demands
for emission reduction and additional demands of consumers on health
and safety for local workers are expected.

Scarcity of
natural
resources

Using less resources is a key factor for the coming future. Government
(EU) regulation is expected to increase in the field of product disposal
and production processes. In general a trend towards less packaging and
more local goods is observed.

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Trends in and strategies of the European retail industry

3.

Domestic furniture

With a view to the CBI target group, CBI has selected the following product groups to fall
5
under the scope of the market segment domestic furniture :
Furniture parts

Dining and living room furniture

Bedroom furniture

Seats

Kitchen furniture
Trends

Strategies

Adoption of
supply chain
technologies

In the future, track-and-trace technology may become more mainstream

to determine the place of origin. Especially for timber products, this will
become more important. For example, Oxford based company, Helveta, is
developing software to track timber through its supply chain to verify its
legal source. Bar codes or RFID (radio frequency identification) tags are
attached to trees when they are in the forest and the boundaries of a
permitted area are mapped using GPS devices. It ensures that no illegally
harvested timber is introduced into the supply chain and also that timber
is not being removed through theft, as through the former paper based
systems corruption was possible.

Changing
competitive
landscape

As online sales increase, there is the expectation that the surface area of
domestic furniture shops will decrease by 30%.The economic recession as
well as the increase of online sales have formed the competitive landscape
in the domestic furniture sector into an marketing action-oriented
market. Businesses often sell their products based on once-off offers (e.g.
two-for-one-offers) and consumers shift from one marketing action
towards the other. This puts margins for exporters under pressure. Some
exporters have adopted similar strategies: they offer their importers
special offers too.
Private labels are not yet very common in this market, but they may be in
the future as a response from the retailer to bind their customers to
buying at their shops in stead of following the marketing offers.

Demographic Consumers in their 30s are the most important buyers of domestic
shifts
furniture. As Europes population is ageing, this will have a negative effect
on sales. It is expected that in the next two decades, the number of people
in Europe in 20-29 age band will fall by 20%, whereas the number in the
50-54 age group will increase by 54%.
The retail landscape will change. Large compartment stores (with large
bulk orders, cheaper products) will be more manifest in the countryside,
whereas smaller shops (small orders, small stocks of specialised items,
room for niche products) will concentrate in the urban areas.
There is a decrease of households with three generations co-residing. In
Europe, this form of family solidarity is still much more widespread in
Southern countries than in Northern and Central European countries but
less widespread than in Eastern Europe. As the household sizes are
smaller, there is a changing demand for smaller couches, tables etc. Also,
there is a trends towards multipurpose-furniture, such as extension
tables and beds or couches with internal storage space.

Made from wood and other materials (metal)

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Trends in and strategies of the European retail industry

Growing
consumer
concerns
about
sustainability

Sustainability concerns in the domestic furniture sector are:

environmental friendly materials such as sustainable produced timber and
organic cotton; sustainable produced products such as the CO2 footprint;
fair-trade products and waste-management.It is expected that these
sustainability criteria will only become of substantial importance no
sooner than four to five years from now. Environmental friendly
production and sweat-shop-free production will be the most important
factors.

Increased
There is some attention for beds and couches that have a good effect on
importance of healthy positioning of the body, but this is mostly in the higher segment
health and
and for branded products.
wellbeing
Increase in
consumer
service
demands

Online sales of domestic furniture increase drastically. Online sales offer

buyers more consumer rights (such as the right to a full refund within 30
days of cancellation). As online sales are becoming more mainstream,
consumers are expecting the same kind of service in regular shops too.
Guarantee certificates will become more important and retailers will want
to recoup the damage from the producers.

Increase in
regulatory
pressure

From 2013 onwards, the EU will implement a new regulation regarding the
legality of timber. This law prohibits illegally harvested timber from all
countries. There are two scenarios on how the new timber regulation may
impact the market share of sustainable certified timber in the
future:1.Either European buyers will accept legal timber and demand for
more expensive sustainable and certified timber will decrease (likely in
Eastern and Southern countries).2.Or implementation will lead to
increased demand for certified sawn wood, as the price of non-certified,
legal timber will be close to the price of certified timber (likely in Western
European countries).
For textiles, there is no such regulation regarding sustainable production,
but there is an increased attention for harmful substances in dyes.

Scarcity of
natural
resources

Recycling will become more important. Currently, European retailers are

trying to prevent consumers to sell their old domestic furniture as a
second hand product, because they want to sell them new products.
The attention for sustainable harvested timber is much more manifest
than its is for textiles.

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Trends in and strategies of the European retail industry

4.

Food

With a view to the CBI target group, CBI has selected the following product groups to fall
under the scope of the market segment food:
Food ingredients (incl. coffee, tea,
juices, jams, herbs, nuts, oils, rice,
etc.)

Fishery products

Fresh fruit and vegetables

Wine

Overall, it is expected that the market will remain relatively stable in the next 10 years,
meaning that is expected that changes will not exceed 2%. All trends will influence food
retail, however the most influencing trend is indicated to be increased importance of
health and wellbeing.
Trends

Strategies

Adoption of
supply chain
technologies

Collaboration and information sharing networks seem to be most

important in food retail. Especially the type of data that is communicated
will change. Now, data on origin and delivery is associated with barcodes.
It is expected that also the content of a product will become associated
with bar codes. Especially, as manufacturers and retailers are cooperating
to establish international standards (GS1) in this area. RFID technology
has been in the spotlights for already 10 years. So far, it has not become
main stream and it is unsure how this will develop in the future.

Changing
competitive
landscape

The competitive landscape differs from EU country to EU country. For

example, in The Netherlands there are more or less three large players.
Competition than focuses on square metres of shopping area with
subsequent price pressure. In Germany on the other hand, there are a lot
of players, 50% consists of hard discount channels. E-commerce may be
big influence on the competitive landscape for many countries as it offers
new sales opportunities that are much more cheaper than square metres.
Price is and remain the most important criteria when selecting suppliers.
It can be possible that in countries where private label has won a lot of
market, the ceiling has been reached (e.g. the UK and The Netherlands).
This has mainly to do with the fact that a retail label competes with a
brand and not with another retail label (e.g. Tesco ketchup competes with
Heinz ketchup and not with Sainsburys ketchup). For retailers, it is
important to market their brand format successfully and much less
important to brand their private labelled individual products. The market
for private label will stagnate in these countries. In other countries (e.g.
Eastern and Southern Europe) there is still a lot of space for growth. With
regard to the expansion of European retailers to Eastern Europe and nonEU countries (e.g. Asia and South America), retreating movements are
identified (e.g. Ahold from Malaysia and South America).

Demographic All kinds of demographic shifts influence the food retail sector. The most
shifts
influencing trend seems to be urbanisation. Urbanised consumers want
to have easy and quick access to food (supermarkets need to be available
2
to them). As a result urbanised areas have made a relatively lot of m
available for food. Aging population leads to smaller proportion (as well
as smaller households), easy-to-open packaging and readable labels.
Growing ethnic and cultural diversity will lead to the retail adopting a

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Trends in and strategies of the European retail industry

more diverse assortment.

Growing
consumer
concerns
about
sustainability

Food retailers will primarily focus on making, in cooperation with

suppliers, the whole supply chain for a particular product or ingredient
more sustainable, especially the environmental impact of processes and
transportation issues (social impact to a lesser extent). Innovation will
focus more on process development than on product development.
Business decisions to improve social and environmental impact of
processes will be based on pragmatism. Access to information on a
retailers objectives, its suppliers, processes and accomplishments will be
very important to consumers (even more than it already is). This is also a
result of the abundance of different labels on environmental and social
responsibility labels. Organic and slow food movements will continue to
grow but remain relatively niche markets.

Increased
importance of
health and
wellbeing

The composition of products will be adjusted more and more, e.g. lesser
salt, calories and fat but more fibres. Purity and authenticity of flavour is
very important too. Moreover, within the framework of EU legislation on
the nutritional aspects more attention will be paid to clear and
informative labelling on energy, fat, proteins, sugar and carbohydrates,
including information on Guidelines Daily Amounts (GDAs).

Increase in
consumer
service
demands

Food is often a composite of many ingredients and therefore not an easy

subject for the personalisation/individualisation trend. However, 24/7
accessibility is a big issue. More and more supermarkets will open online
sales opportunities (e-commerce). Success in this area however, depends
on how supermarkets will succeed to include fresh foods in their online
assortments.

Increase in
regulatory
pressure

All aforementioned regulatory topics remain important in food retail. A

big issue is fat taxes (taxes related to the amount of fat in a product). In
Denmark and Hungary fat taxes have already been implemented and it is
expected that it will be put on the agenda of more EU countries. Fat taxes
are usually passed on the customers. Animal health used to be specifically
an issue in countries like The Netherlands but is going to be made part of
the EU agenda. Moreover regulatory pressure will be focussing on
sustainability and the environmentally friendliness of production
processes (carbon footprints, CO2 emissions). There are already some
legislations regarding the origin, the manufacturer and the processes used
(traceability of the product). With ongoing technology development it is
expect that the baseline for required origin information will be set higher,
including information on all ingredients of a product.

Scarcity of
natural
resources

Again, the food retail will focus on make processes more sustainable, find
uses for every component of a raw ingredient and possibilities for
recycling of waste and packaging will be explored.

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Trends in and strategies of the European retail industry

5.

Cosmetics

With a view to the CBI target group, CBI has selected the following product groups to fall
under the scope of the market segment food:
Essential oils

Waxes

Seaweed and algae

Medicinal and aromatic plants

Shea nuts and butter

Saps and extracts

Trends

Strategies

Adoption of
supply chain
technologies

Because of the notification requirements of the new cosmetic legislation,

it is expected that collaboration and information sharing will be
important strategies in the sector. Since the consumerspreference for
natural and organic health and beauty products continues to grow,
companies are looking for new channels to reach their target customer.
This has led to a significant shift in outlet patterns towards mass market
retailers where they can easily reach a much wider demographic
group. The increased demand for natural ingredients have however some
consequences that can be seen as opportunities from natural ingredients
producers: possible shortage, higher prices and variations in quality and
consistency of ingredients. Buyers will therefore paid more attention to
raw materials specifications at the time they select their suppliers.

Changing
competitive
landscape

Due to the financial crisis consumers will seek out small luxuries in
difficult times. Products that can quickly make a difference to an
individuals well-being and self esteem are those that are most likely to be
prefer by consumers.Also consumers will look for brands that they trust
and are in tune with their needs. Fragrance and colour cosmetics are the
most important segments in the last yearsand together with sun care
protection products are expected to have an important contribution in the
market. The awareness of consumers on the ingredients used and the
impact they produce on the environment, is forcing companies to move
forward more natural and sustainable ingredients.Eco-labels and private
labels are also moving the sector in the same direction and offer new
opportunities for producers of natural ingredients. The demand of sun
care protection products is driving as well the sector to develop new
formats ( i.e. spray instead of greasy thick creams) and broader added
value products (i.e. foundations with SPF).

Demographic Social media is proving to be a prime opportunity to target under 25s. Also
shifts
provides great opportunities to position beauty products, in particular
fragrance and toiletries, to a male audience who is harder to engage
thorough traditional platforms. Anti-aging creams and anti-cellulite skin
care products are in high demand among the aging population of Europe.
Growing
consumer
concerns
about
sustainability

Innovation is the most common strategy used by companies to create

competitive advantages from their competitors. Around 20% of the
turnover of the cosmetics sector is gained through improved or new
formulas often with less amount of chemical and more natural
ingredients. Free-from formulas (e.g. paraben-free) have been a trend
since 2010 and it is expected to continue in this way. On the other hand,
the organic market segment is growing in Europe at aclip of roughly 20%
per year even though these products are often more expensivethen more

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Trends in and strategies of the European retail industry

traditional products.
Increased
importance of
health and
wellbeing

Due to consumers health awareness companies are investing in new

products containing natural ingredients. It is therefore expected a
growing market for natural and organic cosmetics (using natural
ingredients) to replace cosmetics where chemicals are used as raw
materials. EU consumers organisations are also demanding more clarity
on when and how health claims are used. Companies of the sector
therefore are working on criteria on how to use and what kind of
information is required in order to make product-related claims.
Awareness on skin cancer and the risks associated with the exposure to
harmful rays is leading to a growing use of sun care and anti-aging
products. The promotion of positive self esteem and being confident will
be part of campaigns of the sector as a response to the critics generated
from the unreal image of beauty used for the marketing of cosmetics.
Natural supermarkets are also including cosmetics and toiletries in their
assortment with natural products. Natural products are also related to
higher standards of quality. This enables companies to charge high prices,
thereby injecting value into the market. The concern on health will also
result in more awareness campaigns on skin allergy and sun care
promoted by the EU cosmetic sector.

Increase in
consumer
service
demands

As other retail segments, E-commerce is expected to be the main factor

dominating the future. Mobile technology is also starting to be used for
cosmetic products where consumers are scanning QR codes to get
information on the product and ingredients used.

Increase in
regulatory
pressure

The new cosmetic legislation of 2009 will make it easier the entrance of
cosmetics and natural ingredients to Europe because of the
harmonisation of requirements in all EU countries and also the electronic
notification system consider for all products put in the European market.
Although a ban of all products tested on animals must come into force as
of March 2013, the EU is working on a new proposal of this legislation
which will presented in 2012. The private sector and government are
working on funding new alternatives for animal testing. It is expected thus
that this deadline of 2013will be postponed. Contrary to what happened
last years, nanomaterials are now also regulated in the new cosmetic
regulation and the requirements regarding these materials are limited to
notify the presence of them whenever present in cosmetics products. ISO
is also developing a standard for cosmetics that it is expected to be
published in 2013.

Scarcity of
natural
resources

Other trends that to rise more in the coming years are a renewed emphasis
on sustainable packaging to minimize waster and eco-footprint.

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Trends in and strategies of the European retail industry

Producers and exporters in developing countries

All and all for producers and exporters in developing countries who want to apply these
trends and make some money from the innovations they generate, it is important to ask
themselves if they have the potential to (and if so, how):
Influence or shape their companys vision;
Inspire themselves to come up with a new business concept, new venture, or even
brand;
Add a new product or service to their product lines
Speak the language of those retailers already applying the trend.

This document was compiled for CBI by CREM B.V.

Disclaimer CBI market information tools: http://www.cbi.eu/disclaimer

Source: CBI Market Information Database URL:www.cbi.eu Contact: marketaccess@cbi.eu www.cbi.eu/disclaimer